We’re in a state of flux with ongoing uncertainty over the European debt crisis, job losses here at home and the banks signalling that the days of routinely following the Reserve Bank’s moves on interest rates may be over.

We are seeing buying enquiry up significantly. The under $1M market is still the strongest segment but there’s new interest up to $2M and even beyond in Sydney and Melbourne where higher end buyers weren’t around as much in 2011. While it’s too early to tell whether this new enquiry will translate into sales, it’s logical to think that if enquiry is up and new mortgages are up then we will see a good start to the first quarter.

Fuelling buyer interest are the two interest rate cuts last year and vendors more aligned to the current market. There’s also a sense among buyers that after waiting it out in 2011, now is the time to buy when lower rates allow greater borrowing power and excellent value remains on offer.

While this show of confidence is encouraging, there are competitive forces at play. I believe the market won’t have significant price increases until the Europe is resolved and we see further signs of recovery in the US. An improvement in the ASX would also provide a boost but this too relies on overseas developments.